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Governor’s Office of Management and BudgetCreating More Value For Every Tax Dollar Invested

SUCCESS 7 Fundamentals for High Performing OrganizationsSUCCESS: 7 Fundamentals for High Performing Organizations

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HIGH PERFORMINGORGANIZATIONS AREN’TCREATED BY ACCIDENT.

Rather, they have certain infrastructure,

expertise, and systems in place that allow them

to continually deliver better and better results.

While no organization ever has all fundamentals

perfectly designed and implemented, a high

performing organization has a set of core

fundamentals in place and is actively and

continually improving on each. Before diverting

resources or time to other efforts, a high

performing organization focuses on these

7 fundamentals with the requisite expertise.

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Unlike reactionary organizations, a high performing organization that has adopted the 7 fundamentals of SUCCESS avoids many of the challenges addressed in the questions on the following page.

WHY THEY MATTER

The fundamentals outlined in this document allow organizations to pro-actively plan, schedule resources, and reduce the chaos that results from a reactionary approach. Resources are maximized, employees know what they are doing and why, and issues are identified and resolved before they become a crisis. Leadership is able to focus on the few strategies that will yield the greatest results and prevent the diverting of resources into less beneficial initiatives. On-going systems and practices are in place to assess performance so services can continually improve.

While these fundamentals will not prevent every challenge or ensure perfect harmony within the organization, they do help to eliminate many of the problems for which leadership invests significant time and resources. Marketing, communications, and stakeholder buy-in are all made easier when these fundamentals are in place and there is a positive and measurable story to tell.

The 7 SUCCESS fundamentals are to be considered in sequence. For example, clarifying the goal and gaining a deep understanding of operations should come first because the goal becomes the lens for everything else—especially before focusing on IT projects or reorganizations. The SUCCESS Framework is designed to help organizations focus efforts and prioritize work. This doesn’t mean that there won’t be times when parallel work is occurring across the organization or that management shouldn’t immediately address a critical failure. However, when followed in sequential order to the extent possible, the SUCCESS fundamentals promote a more mature organization that helps to minimize crisis interventions.

FOR LEADERSHIP

SUCCESS: 7 Fundamentals for High Performing Organizations4

IS YOUR ORGANIZATION HIGH PERFORMING OR REACTIONARY?Unlike high performing organizations, a reactionary organization often practices the whack-a-mole approach to governance by bouncing from one idea to the next without clear goals that drive the work of the organization. The questions below are designed to help you determine if your organization is more high performing or reactive. A “no” response to a majority of the questions may signal that yours is a more reactionary organization.

Do you have key strategies and measures in place that pro-actively “tell your story?”

Are you able to determine and address the root cause(s) of issues?

Do you know the function or process in your system(s) that creates the most value versus local optima?

Can you sift through the “noise” and focus time and attention in the areas that really matter?

Are you able to surface the underlying assumptions that lead to conflicts?

Does your organization jump to solutions like centralization, decentralization, or automation before addressing root causes?

Do you assume that poorly designed processes are part of the problem as compared to constantly blaming employees for poor system performance?

Do you have a prescribed method to effectively implement changes in the organization?

Do you improve business processes first before automation and do you have a way to capture the impact an investment in technology will have on performance?

Do you have baselines and fast feedback mechanisms to know if a change is working (or not)?

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Do you react to crisis by implementing solutions specific to the problem which may only create more complexity?

Does your program or system have a clear goal that can be measured?

Does the day-to-day work of the organization align with the goal and are there operational measures to ensure this is the case?

Is the “busyness” of your day-to-day work productive?

Do you understand your unit costs—those costs associated with delivering a specific service or product?

Do you look first for hidden capacity within your organization before assuming that you need more money?

Does your organization clearly understand the difference between outcomes and strategy?

Do you spend more time focused on your goals and key strategies than you do on putting out fires?

Do you understand the flow of your work and how underlying processes affect outcomes?

Does the budget shop work with operations to understand hidden capacity before new investments are made?

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SUCCESS: 7 Fundamentals for High Performing Organizations 76 SUCCESS: 7 Fundamentals for High Performing Organizations6

Unlike reactionary

organizations, a high

performing organization

is able to avoid

many of the challenges

outlined in the foregoing

questions by adopting

the 7 fundamentals of SUCCESS.

FOR ORGANIZATIONS

7 fundamentals of a high performing organization

SET CLEAR, MEASURABLE, AND AMBITIOUS GOALS

USE DATA, ANALYSIS,AND THINKING TOOLS

CREATE THESTRATEGY

CREATE THE ORGANIZATIONAND CULTURE

ENGAGE EMPLOYEES AND CUSTOMERS

SYNCHRONIZE PROJECTS AND POLICIES

STAYFOCUSED

SUCCESS: 7 Fundamentals for High Performing Organizations 76 7

GOALS: WHY THEY MATTER

Goals should clearly tell an organization what they should focus on as well as what NOT to focus on. They help align policies, resources, time and attention, and motivate people to galvanize their efforts. Without clear goals, organizations can wander and divert scarce resources that make minimal impact.

WHAT GOOD LOOKS LIKE

• Goals are clear and easily understood.

• Goals are measurable so people know when and if they are making progress.

• Current costs, quality, and capacity to meet demand are baselined against the goal so that the impact of future strategies can be determined.

• Analysis and data confirm the alignment of operational tasks with strategic objectives.

• Leadership frequently assesses progress toward the goals.

• Goals are ambitious.

• Change and strategies are considered only within the context of how they will help the organization reach its goals.

• Number of goals are limited so that management time and attention isn’t fractured.

• Policies are explicitly designed to support the goals.

• Distinctions between goals and strategies are well-known.

SET CLEAR, MEASURABLE, AND AMBITIOUS GOALS

SUCCESS: 7 Fundamentals for High Performing Organizations 98

OPERATIONS: WHY THEY MATTER

An organization’s operations are the vehicle by which the goal is translated into an actual product or service. This discipline ensures that as few resources as possible are used to produce the best product or service for the customer and taxpayer. By using deliberate design strategies, process improvement practices, and focusing on the day-to-day processes and interventions that translate the goal to a service or product, organizations can provide better, faster, and cheaper services and products that make a difference.


• Internal expertise within the organization exists to design and oversee operations.

• Experts understand operational design and principles such as constraints, flow, speed, and quality along with how to tackle root causes.

• Solutions focus on the biggest leverage points where the greatest gains come from the least amount of effort.

• Structures are in place to ensure continuous operational assessment and improvement.

• Measures track capacity, backlogs, error rates, lead times, availability, and other operational factors that ensure quick and quality service delivery.

• Operational measures are monitored daily and made visual to employees when appropriate.

• Organizations recognize that operational expertise is a unique skills set and should specifically hire/train for it.

• Customer voice is captured and considered as part of operational design.

USE DATA, ANALYSIS, AND THINKING TOOLS


DATA ANALYSIS AND INFRASTRUCTURE: WHY THEY MATTER

Key performance measures communicate how well the organization is doing to achieve its primary purpose. A consistent and regular review of outcomes, key performance measures, data that supports decision-making, and the foundation to implement and support evidenced-based practices will keep the attainment of organizational goals foremost in the minds of managers and front-line staff. The measurement of system efficiency provides a rational basis for selecting which business process improvements to make first. Unbiased data analysesjustify present day, evidence-based practices that correlate withlong-term success.


• Value is defined and scrutinized by quality and per dollar throughput.

• Activities that lead to desired outcomes are correlated and monitored over time to maximize long-term results.

• Visibility provided by a measurement system supports better and faster budget decisions; knowledge of results helps managers to control processes in the organization; better and faster budget decisions and process control helps the organization to reduce risk.

• Comparisons of ongoing results with baselines allow the organization to communicate and celebrate success or to explore deeper causes of poor performance.

• Benchmarking system performance helps managers to know if the system is improving relative to outside organizations.

• Analyzing operating expense data of past projects allows administrators to estimate and manage future costs more effectively.

• Every person in the organization understands how his/her measured performance impacts the entire system and the goals of the organization.


STRATEGY: WHY IT MATTERS

Organizations often struggle with complexity, fractured subunits, and programmatic silos. These significant limitations are overcome by creating a strategy that focuses all parts of the organization on only those key areas necessary to achieve the goal. Creating a useful strategy requires insights gained through logical thinking and root cause analysis—minimizing needless and disruptive change. Based on the simplicity of driving to an explicit goal, this strategy resonates at all levels of the organization and with stakeholders.


• Strategies align with and support the goal of the organization.

• Strategies are grounded in strong data and operational analysis.

• Employees at all levels of the organization understand how their individual work contributes to the organization’s overall success.

• There are only a few key strategies—too many strategies can cause confusion about what is really working to improve performance.

• Measurements are in place to determine if the key strategies are positively impacting performance.

• Staff are assigned to manage the key strategies with ongoing management support and direction.

• There is always a sense of urgency around strategies—without urgency, inertia will set in.

• Strategies are pro-active and, supported by solid data, become part of the organization’s ongoing story of performance improvement.

• Strategies, practices, programs, and services are evidenced-based or evidence-informed, are implemented and sustained with fidelity, and are formally evaluated for outcome impact and identification of needed improvements.

CREATETHE STRATEGY


ORGANIZATIONAL DESIGN: WHY IT MATTERS

Align structures, spans of control, and functions to support operational flow and strategy; prevent and detect fraud, noncompliance, and risks; and ensure strong and robust financial systems. Moving boxes around on an org chart is all too common in most organizations. Without having clarity of purpose and a solid understanding of strategy, reorganization in and of itself will not address core problems. Organizational design should exist to support the effective and efficient delivery of a service or product. Hence, the design of an organization (including organization charts and management structures) should align with the goal, strategy, and operations.


• Leadership deliberately creates and supports a culture and organization that fosters productive communication, continuous improvement, and respect.

• Organization form should follow function.

• Reorganizations should only occur once there is a clear understanding of how the change will support flow and operational design.

• Spans of control are reviewed to ensure there are only as many managers as minimally needed to supervise front-line staff and functions. Likewise, there are only as many front-line staff and resources as minimally needed to deliver the products and services to meet demand.

• Administrative and overhead costs are kept in check.

• Change management plans clearly explain why the reorganization is needed to help employees better meet the goal of the organization.

CREATETHE ORGANIZATION AND CULTURE


INTERNAL AUDIT: WHY IT MATTERS

Internal audits help to prevent fraud, allow for transparency, promote safety, and avoid abusive or inappropriate practices. Internal audit allows managers to ensure that they are doing what they are supposed to be doing. Specifically, audits are a tool to help ensure that the operational procedures and other policies are being followed as intended.

FINANCIAL SYSTEMS: WHY THEY MATTER

Understanding and managing an organization’s finances is essential to achieving desired outcomes. Budget and accounting systems should perform essential functions such as tracking and projecting revenues and expenditures. More importantly, a good understanding of the financial resources and information available will provide managers with the opportunity not only to perform basic financial tracking functions, but also align resources with the goal and strategies of the organization. The alignment of resources may include redeploying financial resources from lower-impact uses to those with the highest operational impact.


• Leadership works with internal auditors to create risk profiles that help to target audits.

• Auditors do more than simply generate tasks—they help to identify areas that hinder the organization from performing well and support business priorities.

• Audits not only identify areas that need improvement—they recommend solutions that account for the realistic costs associated with implementing the recommendation and how to best overcome any implementation obstacles.

• Auditors prioritize findings—helping to sort out mission critical findings from less critical issues by recognizing that organizations have limited resources and time.

• Auditors are exposed to operations so they can understand constraints and flow–avoiding recommendations that negatively impact overall performance.

• Auditors have appropriate independence and are removed from any conflict of interest.

• Internal audits identify problems early on so they can be corrected before they grow.


• Organizations understand the difference between fixed and variable costs.

• Organizations understand the difference between one time and on-going funding.

• Financial and budget staff work with and understand operations in order to have insights into hidden capacity and the real need for new investments.


ENGAGEMENT: WHY IT MATTERS

Employees are the most critical resource in any organization. They do the work that produces the result. Regular engagement with employees is crucial to understanding how the work is currently being performed and uncovering both problems and opportunities to improve performance. Those involved directly in the work often have the greatest insight into how to make meaningful improvements. Engagement also requires translating goals into performance plans, compensation options, and the training requisite to help people succeed. Government services ultimately exist to serve customers and taxpayers alike. Understanding their needs, concerns, and characteristics should drive program and service design in order to meet intended outcomes.


ENGAGE EMPLOYEES AND CUSTOMERS

• Employees at all levels understand the organization goal, the measures that define progress toward the goal, and their individual roles in executing strategies and tactics that align to support the goal.

• Training is provided to teach employees operational excellence principles and tools.

• Workshops are held to facilitate employee input to analyze the current work processes and identify the key leverage points that will yield the greatest results with the least amount of effort or investment.

• Employees identify the key strategies and tactics that will maximize the leverage points and create a focused/urgent action plan to achieve quick and lasting results.

• Systems are in place that allow for employees to provide feedback to managers.

• Successes are celebrated.

• Standard operating procedures exist when appropriate.

• Succession plans are part of long-term planning.

• Leadership spends time in the field understanding the work and challenges.

• Strategies or programs are in place to help develop staff expertise.

• Feedback mechanisms exist so employees can improve and be held accountable.

• Organizations proactively find ways to capture the customer voice.


• A reliable methodology exists and is used to select “high return” projects.

• Staff have both the time and expertise to effectively manage projects.

• Projects are managed in an enterprise portfolio that releases new projects only when there is available capacity.

• The number of projects is optimized based on the number of available resources devoted to project work.

• Projects have clear requirements and scope before work begins.

• Project plans capture high level milestones and deliverables.

• Time estimates for project tasks are aggressive in order to reduce the impact of adding in “safety time.”

• Multi-tasking between projects and project tasks is minimized.

• Risks are pro-actively reviewed and mitigated when necessary.

• Management is available as needed for critical decision points or roadblocks.

• Implementation planning is synced with operations.

• Predetermined performance measures are used to track project impact.

• Proposed changes and their rationale are clearly and frequently communicated to employees and stakeholders.

SYNCHRONIZATION: WHY IT MATTERS

Organizations need to have expertise in project management to select and quickly deliver more of the right projects that result in measurable operational improvements and effectively execute initiatives (including new policies) to deliver strategic results. Too often organizations waste precious time and resources on improvement, automation, or research projects that do not meet intended outcomes. In addition, projects often take much longer than anticipated, reducing the capacity to compete additional work.


SYNCHRONIZE PROJECTS AND POLICIES


FOCUS: WHY IT MATTERS

Management time and attention is the biggest constraint within any organization. How well leaders: 1) invest in and stay focused on the area that will create the biggest impact; 2) prioritize; 3) schedule their time; and 4) identify the biggest constraints within an organization to determine if the organization as a whole spends time on the right things and is able to move through work and projects as quickly as possible. When management creates schedules and systems to help them remain focused, they are available to provide direction, remove obstacles, and expedite decision-making. Focus also ensures that management does not overload people and resources with more work than can be absorbed (creating bad multi-tasking).


• Leadership stays focused on the system goals and the few key strategies at any given time.

• Leadership meets regularly and frequently to review strategic measures and performance.

• Leadership deliberately sequences and limits the number of new initiatives or change introduced at any one time into the organization—helping to avoid bad multi-tasking.

• Leadership understands the capacity of their people and systems.

• Leadership helps to quickly remove barriers, provide direction, and/or solve problems by making themselves regularly available to managers.

STAYFOCUSED

Governor’s Office of Management and BudgetCreating More Value For Every Tax Dollar Invested

P.O. Box 142210Salt Lake City, Utah 84114-2210

(801) 538-1027gomb.utah.gov

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